Further Links Contact Us Search Help

Syllabus | Exams | Websites | Resources | Glossary | Teachers

Economics

Home > Economics > Economic policies and management > Monetary policy

Exercise 1 Answers

Provide a True of False response to the following statements.

1. An objective of monetary policy is sustainable economic growth.
   True
   
   
2. When determining the monetary stance the Reserve Bank Board only considers inflation rates.
   False
   
   
3. Market operations refer to the sale of CGS and Repos to influence long-term interest rates.
   False
   
   
4. Exchange settlement accounts are used to settle debts between the banks.
   True
   
   
5. The cash rate is the price of borrowing cash overnight in the money market.
   True
   
   
6. Higher interest rates discourage borrowing and spending by consumers and discourage savings.
   False
   
   
7. The government targets inflation rates between 3% and 5%.
   False
   
   
8. Depreciation in the value of the Australian dollar can cause inflationary pressures in the economy.
   True
   
   
9. A rise in real interest rates relative to our trading partners can cause an appreciation in the value of the Australian dollar.
   True
   
   
10. A neutral stance of monetary policy means that the Reserve Bank wants to maintain the cash rate at current levels.
    True

Back to Exercise 1 questions

Back to Monetary Policy